Insurance 'named insured' on a rental property in an LLC

[cp2010]

What is the name of your state (only U.S. law)? Florida

I bought my vacation rental property and put it in an LLC for the purpose of protecting my personal assets from liability. I just got an insurance policy on the place (i have $300K of liability) but I was concerned that the policy is in my own name and not the name of the LLC (my LLC is listed as an addon party).

the insurance people told me this is standard practice but It feels like Im a target. how have other people insured their properties in an LLC?

 

[NIV]

Is it "named insured" or is it "additional named insured"?

editeditedit
I won't link as it may conflict with rules here. But, if you were to search for something like, I don't know, "When a Who Is Actually a What: Properly Insuring Residences Owned by a Trust, LLC, or Other Entity", you might find an article that may help you with some answers.

 

[adjusterjack]

What is the name of your state (only U.S. law)? Florida

I bought my vacation rental property and put it in an LLC for the purpose of protecting my personal assets from liability. I just got an insurance policy on the place (i have $300K of liability) but I was concerned that the policy is in my own name and not the name of the LLC (my LLC is listed as an addon party).

the insurance people told me this is standard practice but It feels like Im a target. how have other people insured their properties in an LLC?

If you bought a homeowners policy, the policy has to be in your own name with the LLC as an additional insured.

Homeowners policies are not written on businesses that own homes because they are, well, homeowners policies not businessowners policies.

If you want your policy in the name of the LLC you will have to get a commercial policy (lots more money) and that policy will list your LLC as named insured and you as an additional insured.

Can't imagine where you got the idea that an LLC protects your personal assets in the first place. The LLC form of business, like the corporation, protects the owners of the business from personal liability for the debts of the business. For example, if the LLC enters into a contract with a third party and breaches it, the LLC is liable for that, but the LLC members are not unless they personally guaranteed the contract, which is something that lenders and astute business people often insist upon. The LLC member is always responsible for his own debts and wrongs, including liability for the negligent acts he performs for the business (and for which the LLC might also be liable). There is also the possibility of “piercing the corporate veil” (google is) which is an even bigger risk for single member LLCs.

 

[adjusterjack]

Is it "named insured" or is it "additional named insured"?

editeditedit
I won't link as it may conflict with rules here. But, if you were to search for something like, I don't know, "When a Who Is Actually a What: Properly Insuring Residences Owned by a Trust, LLC, or Other Entity", you might find an article that may help you with some answers.

No problem with posting links to reference material.

https://www.irmi.com/articles/expert-commentary/insuring-residences-owned-by-a-trust-llc-or-other-entity

What the moderators here don't seem to like are sites that sell a service (especially a legal service) in addition to posting reference material which, unfortunately is just about every site that posts reference material.

 

[cp2010]

Can't imagine where you got the idea that an LLC protects your personal assets in the first place.

Thanks for confirming that only a business insurance policy can list the LLC as the insured...but Im surprised about your comments about LLC protection. Almost everything Ive read and everyone Ive spoken to has said that if you put your rental property in an LLC (ie the LLC has title on the property not me), that it will protect my personal assets if someone got sue crazy. Main example given was if someone died there and a greedy lawyer wanted to sue for $2M but the liability insurance was only for $300k, they might be able to come after my 401k and life savings. Are you saying that this protection is not provided by the LLC entity?

assuming the LLC was providing me said protection.. my question about insurance policy "named insured" was directed toward the concept of piercing the vail. I have set up a bank account to pay the LLC bills rather than use my personal account and I was concerned about not doing the same for the condo insurance. the policy shows my name and address as 'the insured' and it shows the LLC as "additional insured interest"

 

[FlyingRon]

You need to talk to a good insurance agent. A standard homeowner's policy won't necessarily protect you if you are in the business of renting this place out.
Is the place financed? You should be careful there as well. If you got the loan as a personal residence, you likely will need consent to rent it to use it for this. Furhter, the transfer to the LLC will almost certainly arouse their interest and could legitimately result in a due-on-sale clause being invoked.

Furhter, the "protection" from an LLC is probably illusory if you are managing the place yourself.

 

[NIV]

Almost everything Ive read and everyone Ive spoken to has said that if you put your rental property in an LLC (ie the LLC has title on the property not me), that it will protect my personal assets if someone got sue crazy. Main example given was if someone died there and a greedy lawyer wanted to sue for $2M but the liability insurance was only for $300k, they might be able to come after my 401k and life savings. Are you saying that this protection is not provided by the LLC entity?

Did YOU do anything wrong regarding the death?

In your example, it seems you are only worried about vicarious and/or property owner liability. Liability based on the status of the person/entity and not really on their actions or lack thereof. There, the LLC should prevent what is known as outside liability to you. As long as you did not do anything that would case liability for your actions, the LLC should protect the assets of the members.

 

[adjusterjack]

Thanks for confirming that only a business insurance policy can list the LLC as the insured...but Im surprised about your comments about LLC protection. Almost everything Ive read and everyone Ive spoken to has said that if you put your rental property in an LLC (ie the LLC has title on the property not me), that it will protect my personal assets if someone got sue crazy. Main example given was if someone died there and a greedy lawyer wanted to sue for $2M but the liability insurance was only for $300k, they might be able to come after my 401k and life savings. Are you saying that this protection is not provided by the LLC entity?

A greedy lawyer (heck, any lawyer) would sue you personally anyway and if you lose your life savings is still at risk, though your 401(k) is exempt from judgment under federal law.

assuming the LLC was providing me said protection.. my question about insurance policy "named insured" was directed toward the concept of piercing the vail. I have set up a bank account to pay the LLC bills rather than use my personal account and I was concerned about not doing the same for the condo insurance. the policy shows my name and address as 'the insured' and it shows the LLC as "additional insured interest"

Not sure what your issue is since both your LLC and you, personally, have liability coverage under the homeowners policy.